LAWN CARE AND LANDSCAPING IOWA SALES TAX ISSUES - Terry O'Neill Taxpayer Service Specialist
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LAWN CARE AND LANDSCAPING
IOWA SALES TAX ISSUES
Terry O’Neill
Taxpayer Service Specialist
Subject to Iowa Sales Tax?
Lawn Care? Landscaping?
YES
Taxable Lawn Care • mowing • trimming • watering • fertilizing • seeding • sodding • killing insects, moles, weeds, or fungi
What is a Lawn?
• cemetery grounds
• golf courses
• parks
• grass surrounding
residential or commercial buildings or
structures
Taxable, unless the property
owner is exempt.
What Isn’t a Lawn?
• ditches
• vacant lots
• railroad right-of-way
• isolated patch of grass
or weeds
Care is not taxable.
What Property Owners
Are Exempt?
Some examples are:
• Governmental entities
• Public schools
• Private, nonprofit educational institutions
• Nonprofit hospitals, hospices, and
museums
Are All Nonprofits Exempt? No, most nonprofit organizations are taxable, including: • Churches • Most charitable organizations • Social clubs and similar organizations
Does Everyone Need
to Collect Sales Tax?
Yes, unless:
• owner is the only one providing services;
• owner is a full-time student; and
• total gross receipts for a calendar year is
less than $5,000.
QUIZ QUESTION #1 I’m mowing the grass at a church-owned cemetery. Do I need to collect sales tax? Yes. Churches are taxable & a cemetery is considered a lawn.
Landscaping Defined
• Arrange or modify
natural condition of land
• Public or private use
or enjoyment
This is taxable.Taxable Landscaping • Excavating • Planting • Pruning • Placing sand, rock, wood chips
What Isn’t Taxable? • Landscape Architect – services separately stated and billed – registered under Iowa Code section 544B.2 • For a Building or Structure that is – new construction – reconstruction – alteration – expansion, or Sales Tax – remodeling
QUIZ QUESTION #2a
Construction of a new building was
completed in January. I’m hired in April to
do the landscaping.
Do I collect sales tax?
No. The service is performed in
connection with new construction.
13QUIZ QUESTION #2b
Construction of a new building was
completed in May. I’m hired in September
to do the landscaping.
Do I collect sales tax?
Yes. The service is NOT performed in
connection with new construction.
14What About Materials?
• fertilizer • shrubbery
• chemicals • bulbs
• sod • sand
• seed • woodchips
• dirt • rock
• trees • other similar items
Tax Free if purchased
for resale.Materials For Resale • Parties agree materials sold separately from the service • Definite quantity or amount sold for a specific price • Must be itemized on the bill • Sales tax is charged on both materials and labor
When Purchased For Resale
The service provider must
give the supplier a valid
Iowa Sales Tax Exemption
CertificateBilling Materials For Resale
LAWN INVOICE LAWN INVOICE
CARE IOWA CARE IOWA
Box 26070 Des Moines PH: 515-555-4008 Box 26070 Des Moines PH: 515-555-4008
Van Meter, Iowa 50261-0260 Sioux City PH: 712-555-7614 Van Meter, Iowa 50261-0260 Sioux City PH: 712-555-7614
PH: 515-555-2261 Waterloo PH: 319-555-2020 PH: 515-555-2261 Waterloo PH: 319-555-2020
Mrs. IMA Customer INVOICE NO. 743738 URA Customer INVOICE NO. 743721
Elm Street Main Street
CUSTOMER NO. 6-44137 CUSTOMER NO. 8-13276
Adel, IA 54321 X-1-94 Zwingle, IA 54321 A-2-88
DATE: TIME: APPLICATOR: DATE: TIME: APPLICATOR:
07-17-09 10 am Joe Worker 07-17-09 8 am Janet Worker
PLEASE RETURN THIS PORTION WITH PAYMENT PLEASE RETURN THIS PORTION WITH PAYMENT
AMOUNT DUE AMOUNT DUE
Charge: $ 50.00 Charge: $300.00 $321.00
$53.00 6% Sales Tax: $ 18.00
6% Sales Tax: $ 3.00
1% Regular Local Option $ 3.00
DUE UPON RECEIPT OF INVOICE DUE UPON RECEIPT OF INVOICE
Accounts that are not paid in 30 days will have a FINANCE CHARGE of 1 1/2 % Accounts that are not paid in 30 days will have a FINANCE CHARGE of 1 1/2 %
TERMS: per month on the unpaid balance or a minimum of 50c WHICHEVER IS GREATER ADDED TERMS: per month on the unpaid balance or a minimum of 50c WHICHEVER IS GREATER ADDED
TO THE ACCOUNT. This is an annual percentage rate of 18%. TO THE ACCOUNT. This is an annual percentage rate of 18%.
Charges for Material Applied: $ 25.00 Labor Charge: $100.00
Labor and Equipment Charge: $ 25.00 Chemicals - 31 LBS: $ 60.00
Materials Applied: Fertilizer, Crabgrass control, Fertilizer - 51 LBS $100.00
Broadleaf weed control Materials Applied to Lawn - 4 Bushels $ 40.00
Amount of Material Applied: 40 GallonsJenny’s Lawn Care Bill’s Lawn
Care
Mow, trim, labor 50.00
20 lbs. Seed 30.00 Mow, trim, seed
80.00 80.00
Local option 1% .80 tax 5.60
6% tax 4.80
total due: $85.60 Total due: $85.60
Retailer of materials
and labor Retailer of taxable labor
BUYS MATERIALS PAYS TAX ON
TAX EXEMPT MATERIALSWhen retailers
fail to itemize
Landscape Materials
separately from
exempt labor,
the total bill is taxableQUIZ QUESTION #3
I don’t separately itemize materials on my
bill to the customer.
Can I buy those materials exempt from
sales tax?
No. Separately itemized bills are one
requirement of purchasing tax free for
resale.
21Can Landscapers be Contractors?
YES
When providing both labor and materials to
build a structure, for that portion of the job.What is a Structure?
• retaining walls
• lawn lighting systems
• lawn irrigation systems
• pools
• walks
• drives
• decks
• fences
• fountains
• any other item permanently
attached to real propertyBuilding Materials • concrete • railroad ties • wood • bricks • stone • pavers • pipe • conduit
Sales Tax When You Work as
a Contractor
• You are the consumer of building Supplier = pay tax
materials.
• You must pay sales tax on all
building materials to your suppliers.
• You must include this sales tax
expense as part of the bid price Customer = no tax
for the project.
• No sales tax is charged to
the customer on materials or labor.QUIZ QUESTION #4 I have a contract to build a retaining wall. Can I purchase the stones I use to construct the wall tax free for resale ? No. Contractors are the final consumer of building materials.
On Our Web Site
www.iowa.gov/tax
• Landscaping and Lawn Care publication
• Call us: 8 a.m. - 4:15 p.m. CT
515-281-3114 or
1-800-367-3388 (Iowa, Omaha, Rock Island, Moline)
• E-mail us at idr@iowa.gov28
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